U.S. consumer confidence fell slightly in February, over concerns about the near-term outlook for business conditions and jobs.
The Conference Board said Tuesday that its confidence index dipped to 78.1 this month, down from 79.4 in January.
“Consumers believe the economy has improved, but they do not foresee it gaining considerable momentum in the months ahead,” said Lynn Franco, director of economic indicators at the Conference Board.
Consumer sentiment is closely watched for indications about how it will impact consumer spending, which accounts for 70 percent of economic activity.
Views about current conditions increased for the fourth consecutive month, and now stand at the highest level in almost six years. But the index that tracks consumer expectations dipped slightly, pulling the overall reading down.
Amna Asaf, an economist at Capital Economics, said the small decline in February likely reflected the bad weather that much of the country has had to endure this winter. She said it also could have been a delayed reaction to the tumble the stock market took in January. But with the stock market now rebounding, she predicted confidence will rise as well.
“The improving fundamentals suggest that a rebound (in confidence) is just around the corner,” she said.
In the expectations category, consumer sentiment about the labor market was a bit more pessimistic than it has been, possibly reflecting two months of weak job gains.
Employers added a tepid 113,000 jobs in January, after a lackluster gain of 75,000 in December. That was far below last year’s monthly average of 194,000.
There was solid hiring in manufacturing and construction last month, which has contributed to optimism that the weaker job growth was a temporary lull and not the start of another swoon for the economy.
At its December and January meetings, the Federal Reserve trimmed its monthly bond purchases and indicated that it feels the economy is gaining momentum.
Many private analysts are forecasting that the overall economy will grow at around 3 percent this year, up a full percentage point from 2013 growth. The federal government is expected to be less of a drag on activity this year. Tax increases and across-the-board spending cuts trimmed growth by an estimated 1.75 percentage points in 2013.
As the drag from the government lessens, the expectation is that economic growth and job creation will pick up, giving a boost to confidence and consumer spending, which will help drive even faster growth.